Part of the Contributions to Economics book series (CE)
Cycles are not like tonsils, separable things that might be treated by themselves, but are, like the beat of the heart, of the essence of the organ that displays them.
KeywordsBusiness Cycle Stylize Fact Technology Shock Business Cycle Theory Real Business Cycle
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- 1.Although Mankiw in Snowdon and Vane (1995), Hartley, Hoover and Salyer (1997) as well as parts of the earlier critics refute the RBC approach on the preponderance of empirical evidence, the debate is partly overshadowed by ideological aspects ( Neo-Keynesian vs. Neoclassical school).Google Scholar
- 2.The quoted critiques address primarily the earlier “orthodox” RBC works. This criticisms include, for example, also the fundamental objections stated by Summers (1986) and Mankiw (1989). However, there are some recent research efforts in the RBC tradition (“second generation” RBC) that move away from the sole concentration on productivity shocks to the integration of cyclic investment dynamics. These are discussed in section 1.2.3.Google Scholar
- 3.It is curious that this term completely replaced the more neutral ‘economic fluctuations’ both in general use and in the classification system of the American Economic Association (AEA) around the time that economists ceased to believe in the existence of ‘cycles.’ This is unfortunate, because the distinction between genuinely cyclical and other fluctuations is an important one.Google Scholar
- 4.I use the word ‘cycle’ to describe the type of irregular periodic movement associated with a stochastic process possessing at least one complex root. Hillinger (1992) used the term ‘quasi cycle’ in this context. However, since no one seriously claims that economic cycles are strictly periodic, it seems better not to multiply terms.Google Scholar
- 5.Cycles of about 50 years, associated with major innovations, variously referred to as ‘Kondratieff cycles’, or ‘long waves’ were not a part of the CBC framework.Google Scholar
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